Equity markets may be a good way to protect your savings and get healthy returns on investment. But when the market starts behaving like KSE is doing these days, you are forced to grope for options.
And one such option is commodity trading. The countrys first commodity trading bourse - National Commodity Exchange Limited - has just launched a project to attract KSE investors to trade in different commodity futures contracts.
KSE investors can now buy and sell gold or oil futures, using the same trading terminal as the one used for trading stocks. Lately, the NCEL has been inviting KSE brokers to allow trading on their terminal, KATS.
"We are targeting intermediaries; we have already integrated with KSEs trading system, and now are looking at other options," NCELs chief executive officer Samir Ahmed, who plans to attract Lahore equity brokers soon, told BR Research on Tuesday.
Although it is too soon to expect a surge in NCELs trading volumes, Samirs moves do seem promising; in just the last year average daily volumes in various gold futures products have risen to 5,000-6,000 ounce from 400-500 ounce last year.
And knowing that gold is a hot investment commodity these days, there are chances that electronic trading in the yellow metal will likely boost turnover of the exchange, especially if equities remain as lacklustre as they are these days.
But there is more to NCEL than gold investing. The firm plans to introduce refined sugar futures in the near future. Reportedly, the draft paper has been finalised and the product is just going through fine tuning consultation process before its officially launched in the next three months.
Hopefully, the launch of the product will help rationalise sugar prices as consumers and businesses would be able to lock in prices beforehand.
Eyeing the potential of growth in commodity trading, brokers have started offering commodity trading services.
"We have already started commodity broking and we plan to offer the services through our online system as well," Muzzamil Aslam, head of business development at JS Global Capital told Business Recorder earlier this year.
Yet, while the NCEL may be getting more brokers offer commodity trade, the key lies in investor awareness, and thats where the stakeholders appear to be lacking behind.
As for government support, perhaps the exemption of capital gains tax on commodities traded through NCEL, isn too much to ask, given the nascent stage of commodity trading is in the country.
Comments
Comments are closed for this article.